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LNG USA 2005 IQPC Houston, Texas November 9, 2005 Bruce F. Kiely Baker Botts L.L.P. Washington, D.C.

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Presentation on theme: "LNG USA 2005 IQPC Houston, Texas November 9, 2005 Bruce F. Kiely Baker Botts L.L.P. Washington, D.C."— Presentation transcript:

1 LNG USA 2005 IQPC Houston, Texas November 9, 2005 Bruce F. Kiely Baker Botts L.L.P. Washington, D.C.

2 What The Energy Policy Act Of 2005 Did And Did Not Do 2

3 What Did The EPAct Do? EPAct §311 – FERC Jurisdiction With the notoriety about the current and expected shortage of natural gas and the need for new supply sources to be closer to markets, LNG siting is a feature of EPAct and Policy  Affirmed FERC's exclusive authority to approve onshore LNG terminals  siting, construction, expansion, operation  FERC cannot deny an application if the applicant wants exclusive use of the terminal  FERC cannot condition approval on open access or rate levels Comment: EPAct does not change other Federal authority delegated to states Coastal Zone Management Act Clean Air Act Clean Water Act 3

4 EPAct §311d - Pre-Filing Requirement for LNG Terminals  Requires applicant to do NEPA pre-filing at least 6 months prior to filing application  FERC has issued pre-filing regulations  Mandatory pre-filing requirement covers all new and expansion projects  Need to coordinate U.S. Coast Guard “Waterway Security Assessment” (“WSA”) with pre-filing process  Need to establish all stakeholders and levels of communication  Need to meet a series of time deadlines for action  Can consult with FERC Staff and FERC’s Third Party Environmental Consultant Comment: Overall, not too many changes to past pre- filing practice, but it now is more formalized and mandatory 4

5 EPAct §311d - State Consultations Governor of state in which an LNG terminal is proposed is to designate a leading state agency  Requires FERC to consult with state agency in charge of LNG projects in state where terminal is to be located as to  state and local safety considerations  feasibility of remote siting  local emergency response capabilities 5

6 EPAct §311d - State Safety Advisory Report  State may provide FERC with "advisory report" on safety considerations  FERC must review and respond specifically to each issue Comment: FERC already performs the analysis, but EPAct creates a new requirement for FERC action and a new potential for legal challenge  State may conduct post-in-service safety inspections and report to FERC 6

7 EPAct §311d - FERC Approval of LNG Project  Requires that applicant develop an Emergency Response Plan ("ERP") in consultation with USCG, state and local agencies  Requires that ERP must include a cost-sharing plan listing safety- related costs of state and local to be reimbursed by applicant  Requires FERC to approve the ERP 7

8 EPAct §313 – FERC as Lead Agency for NEPA Review  Designates FERC as lead agency for all Federal approvals including Federal approvals administered by states  Examples: USACE – Dredging Permit USCG – WSA, NVIC compliance CZMA – Consistency Determination CWA - §401 Permit CAA – Clean Air Permits  FERC to set Processing Schedules for others to follow  FERC required to set schedule for all Federal approvals including Federal approvals administered by states  All agencies must meet the scheduled deadlines  If agency fails to meet deadlines, applicant may appeal failure to act to D.C. Circuit  D.C. Circuit may require agency to act if it finds failure to act would prevent construction, expansion or operation of the terminal 8

9 EPAct §313 – Judicial Review  Court of Appeals for circuit in which terminal is to be located has exclusive jurisdiction over appeals of Federal approvals administered by states: CWA, CAA (not CZMA) Comment: One state already has challenged constitutionality of judicial review of a state act under CWA in the Second Circuit  FERC is to develop one consolidated record for all appeals of Federal actions except CZMA  No change as to appeals of FERC actions as to LNG terminal 9

10 What EPAct Did Not Change  NEPA Review – full NEPA review is required  Public Interest – public interest finding under NGA §3 still required  State Agency Approvals Under State Laws  Applicants still face challenges in approval process of anti- infrastructure states  Technicalities of regulations  Delay in processing  Repeated demands for information  Changing standards 10

11  State Agency Approvals Of Certain Federal Laws  Coastal Zone Management Act (“CZMA”)  Clean Water Act (“CWA”)  Still face delay tactics  Repeated requests for information  State programs that require all state environmental permits as pre- condition to CZMA consideration/approval  Claims of incompleteness of application to cause delay  CZMA a tool of choice of anti-infrastructure states  Appeal of adverse CZMA action is to Department of Commerce  EPAct §381 - New deadline for action by Secretary of Commerce on CZMA appeals 30 days after filing of appeal to issue notice of appeal 160 days after notice to close the record – issue notice record is closed 60 days after notice record is closed to act on appeal 11

12 Conclusion  EPAct is helpful statute, but not a complete solution to onshore siting issues  Need to follow FERC’s pre-filing rules carefully  Try to get states to cooperate  Try to get states to act promptly  Develop the best record possible  Need to pay serious attention to USCG requirements and how they interface with FERC’s NEPA and Section 3 processing  Need to be prepared to address the challenge of actions of states opposed to infrastructure acting under state and Federal laws 12

13 THANK YOU


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